9th Jan 2015 08:19
LONDON (Alliance News) - Pawnbroker H&T Group PLC Friday said it expects its 2014 pretax profit to be in line with current market consensus expectations, pointing to another fall in annual profits.
The group, which trades under the brand names H&T Pawnbrokers and est1897, posted a pretax profit of GBP6.7 million in 2013 and a GBP17 million profit in 2012.
Analysts are expecting H&T Group report a pretax profit of GBP5.17 million for 2014, according to a consensus of four analysts on Morningstar.
Back in August, H&T said its first half pretax profit fell by more than half, primarily due to reduced profits from its pawnbroking scrap and gold purchasing operations, again from falling gold prices. However it has also been faced with heightened competitive pressure and regulatory challenges across the wider UK alternative credit sector.
In its trading update Friday, H&T again highlighted the same issues.
"The impact of low gold prices, competition and regulatory change have combined to place the business under significant pressure in 2014. Despite this backdrop, the business has generated strong cash flows and has continued to implement a range of strategies and measures to improve performance going forward," the company said.
H&T said its pledge book at the end of December had reduced by almost 13% year-on-year to GBP38.5 million, hit by a competitive environment and reduced lending rates. However, the group said the pledge book stabilised in the second half of the year. In the fourth quarter, the group said like-for-like retail sales increased 10.5% on the prior year, with gross profits increasing by 7.4% year-on-year in the quarter.
"The board expects that the current challenging market will accelerate the industry consolidation and rationalisation that we believe is necessary in the short term," it said.
The group closed eight of its underperforming stores during the year. It also opened one new H&T Pawnbrokers, acquired one established pawnbroking store and opened three stand-alone est1897 retail outlets. At year end, the group operated from 191 stores, it said, a majority of which were H&T Pawnbrokers stores.
During the year, the group continues to pay back some its debt to help de-risk its balance sheet, ending the year with net debt of GBP9.7 million, down from GBP20.8 million at the end of 2013.
H&T said it will report its full year results on March 5.
H&T shares were untraded Friday morning. The stock last traded at 160.59 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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